Dear Source:
The sudden public emergence of the Captain Morgan distillery plan and the urgency with which the Governor is attempting to push this initiative through the Legislature should raise red flags across the territory, particularly among the residents of St. Croix. Let me be clear – I am a strong proponent of economic development in the Virgin Islands and will encourage and support any initiative that will genuinely benefit the residents and the community.
But I also strongly believe in the inclusive nature of successful government, and no one, other than the Governor and the management of Diageo, appear to have been included in this decision thus far. Apparently, these discussions have been going on for more than a year and many significant funding decisions have been made, decisions that will cost the Territories millions of dollars.
And yet, the plan is to hastily present this venture to the Legislature, with no public input through any forum, and rush it through to completion. That is not acceptable.
So let's step back from the fanfare and see just what we've got here. According to the Governor, during his press conference, this is the arrangement between the Virgin Islands and Diageo:
The company will get Economic Development Commission (EDC) tax benefits of "some form," either annual incentive payments or, alternately, an option to receive a grant to pay for the construction of the plant; the same molasses subsidy and market-support payment arrangement enjoyed by Cruzan Rum.
The operation is expected to generate "no fewer than 40 full-time jobs, jobs that will require skilled labor."
Diageo would develop, own and operate the plant, commit to making all of its Captain Morgan rum at the plant for at least 30 years, and be liable for damages if it breached the agreement. Rum excise taxes collected by the federal government and remitted to the territory are the principal way the distillery will benefit the territory.
The territory would reportedly get at least $100 million over the 30-year span of the agreement.
The taxpayers need far more information than this before a decision of this magnitude can be made.
· Exactly what is the structure and form of these EDC benefits? We need far more detail on these funds than have been presented thus far;
· What would be the conditions for the "incentive payment" and what rationale is there to offer the company an option to receive a grant to pay for the construction of the plant? Where will these funds come from?
· What is the cost of extending the same molasses subsidy and market support payment arrangement afforded to Cruzan Rum?
· What categories of these "40 jobs" the company expects to create are earmarked to be filled by local residents? And, in an operation the size and scope of the one proposed, only 40 or so ongoing employment opportunities are expected. Are there any guarantees that the initial work (construction, supplies, etc.) will be guaranteed to local vendors?
· How does the joint venture nature of this project fit in the fact that the company will own the business outright?
And, outside of the excise taxes, the return to the General fund is "a minimum of $100 million" over the next 30 years – that's about $3 million a year – that's already being touted as the answer to every financial woe from reducing the unfunded liability plaguing the Government Employees' Retirement System, to new schools, elderly living facilities and local road repair.
Without more complete disclosure, and with no published plans to allow public input on this massive project, I cannot see how residents can be comfortable that this initiative will benefit the many, and not the select few.
Even members of the Legislature are being given precious little time to read, review and digest the information prior to the special session that will be called to approve the agreement.
We must be absolutely sure that this is not another hastily agreed-upon project that will fail to profit no one other than the Company and a few local individuals who have had an opportunity to claim a piece of the pie. We must have the opportunity to give public input and ask all of the questions we feel are relevant before any action is taken on this matter.
We can't afford to make a mistake in a financial undertaking this large, no matter how pretty the package maybe that's being presented.
Michael Springer
St. Croix
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